[Reader-list] UK tackling BigRetail

[lalitha kamath]

This might be of interest in light of the concerns about big retail destroying small kirana shops and the subsequent closure of many of the big retailer's outlets...




Tesco and Asda attack Competition Commission crackdown

By James Thompson

Friday, 27 February 2009


Tesco and Asda have attacked the Competition Commission's plans to
crack down on supermarkets' relationships with suppliers, arguing it
will lead to higher prices for consumers as grocers are burdened with
a further deluge of red tape.

The commission today unveiled its proposals for a new and strengthened
Groceries Supply Code of Practice that includes prohibiting
retrospective adjustments to contracts.

It also plans to make it harder for grocers to delist suppliers and
prohibit them from holding suppliers liable for losses due to
shrinkage, such as damaged products.

Paul Kelly, the director of corporate affairs at Asda, said the cost
of administering the code for supermarkets and its impact on weakening
the "competitive tension" that exists between grocers and suppliers
will lead to higher prices for consumers. "It seems perverse to put in
regulations that by the Competition Commission's own admission will
put up prices for consumers."

The commission has given the inquiry's participants one month to
respond to its guidance, but after that, it is keen to bring in GSCOP
before the end of 2009.

Lucy Neville-Rolfe, Tesco's executive director, said: "In the current
sensitive economic climate, this proposal adds substantial costs to an
industry that is generally working well for the consumer. The
Commission says they are seeking to avoid undue burdens on business,
but they have done no cost benefit analysis of the kind usually
carried out under Government guidelines on regulation."

Mr Kelly said the new code will offer protection to under-performing
suppliers. "This is potentially a mandate for protecting smaller
suppliers whereas good manufacturers will lose out because they cannot
easily replace poor ones and that seems slightly perverse as well," he
said.

Ms Neville-Rolfe cited the administrative burden of the new code. "We
are glad the order is out for consultation, and we will be making a
number of points to reduce compliance costs for all concerned and
avoid regulatory creep. For example very minor changes to arrangements
will now have to be formally confirmed in writing which will involve
an extra 2 million emails a year for Tesco alone," she said.

While Tesco, Asda, Morrisons and Sainsbury's are covered by the
current code of practice, all grocery retailers with annual turnover
of more than £1bn, includinng Iceland, Aldi and Waitrose, will be
covered by GSCOP.

The commission also wants to introduce an ombudsman which will handle
disputes between grocers and suppliers.

The commission delivered its final report into the two-year grocery
inquiry in April 2008, but Tesco is appealing a separate proposal, the
Competition Test, which seeks to prevent one retailer from gaining a
dominant position in a local market.

The Competition Appeals Tribunal is expected to deliver its verdict on
Tesco's appeal of the Competition Test over the coming weeks.

http://www.independent.co.uk/news/business/news/tesco-and-asda-attack-competition-commission-crackdown-1633868.html

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